Last night, I went for a dinner with a bunch of b-school classmates and someone started the debate about how unsustainable the Toronto real estate market has become and why all of them would remain "renter" until the market cool down. I am always with the view that you buy when you are ready and feel the need, unless you are in the market like Hong Kong where property values have surged 50% since early 2009 (in less than 24 months).
Being an investor myself, I am also concern about the state of health of development here. While looking at the Canada overall, understandabily the overall number is skewed by BC, which accounts for ~15% population. And if you look at affordability across provinces, there are huge differences from Alberta at below 40% to BC at 70%. Ontario and Toronto are both just above 40%, which is anywhere up to 10% higher than the trough but in line with most of the time during the last two decades. Some can argue this number can skyrocket when interest rate jump. But given the currnet state of economy of our country and South of the border, interest rate hike might not happen too soon. From the same report, it's also apparent that though the 40% index in Toronto might be acceptable to users, that will make cashflow positive really difficult to investor. The best range is between 20 - 35 where property values are reasonable but cost of ownership is not too low that end up no one renting in the region.
Another data point from Toronto Real Estate Board shows a even more affodable situation if the data being inflation-adjusted.
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